Transaction highlights

Snapshot of total deals

Although there was a slight decrease in deal volumes in 2023 following a strong 2022, activity peaked towards the end of the year.

Q2 was the quietest quarter for transactions, with confidence impacted by a slow down in hiring in a number of sectors. This forced potential purchasers to refocus on organic growth.

Deal volumes trending upwards towards the end of 2023 seems to have continued into the start of 2024. Whilst positive, it will be interesting to see if this continues given a variety of geopolitical headwinds, including the fact this year will see national elections held in over 60 countries.

Transaction by sector

IT, technology and digital were buoyant areas for recruitment transactional activity, comprising 25% of all deals in the 2023.

With the continued development of AI in 2023, increased activity is expected from specialist technology firms as more resource is dedicated to exploring AI in larger corporates. In turn, we would expect to see more M&A activity amongst these specialist IT recruitment firms, which are increasingly attractive to potential buyers.

It is important to note that the technology sector was hit in 2023 with many redundancies taking place at large technology firms and a lack of investment. However, the success for recruitment firms in this sector is through specialisms in certain areas of technology, whilst generalist IT recruiters continue to struggle as we move through Q1 2024.

AI is also starting to impact traditional recruitment models, which is evident on the candidate side with tools that are disrupting the market such as ChatGPT and AI smart software, including Jobscan’s CV optimisation or Arytic’s job search platform based on real-time analytics. Recruiters that are leveraging this on the candidate side, as well as in their own back office functions, are expected to see increases in value.

As presented in our table (further below this page), a sample of four of the five transactions* that took place during 2023 were in the IT, technology and digital sector. Businesses continue to invest significant sums into technology, and the current UK government has signalled significant interest and investment in this area, in particular with AI and cyber security, and how these present opportunities to the UK economy. The UK's commitment in this area was underpinned by hosting the inaugural global AI Safety Summit at Bletchley Park in November 2023.

Increased investment into this space would likely result in increased demand for specialist staff, and we can see this correlation clearly from our research.

	2023	2022
Generalist	18	27
IT, Technology & Digital	24	21
Healthcare, pharmaceutical & social care	13	15
Education	8	9
Professional services	10	9
Manufacturing & Engineering	5	9
Other	18	13

A sample of key M&A activity involving UK targets in the 12 months to 31 December 2023*

	Target	Acquirer	Closed date	Equity value (EV) (£)	Sector specialism of target	Transaction overview
1	Capita Business Services Ltd	Inspirit Capital	06/03/2023	21,000,000	IT, Technology & Digital	The acquisition relates to Capita’s resourcing businesses which consist of Capita Resourcing HR Solutions and ThirtyThree. The three businesses provide human capital resourcing services to both public and private sectors across the UK.
2	Tech Returners Limited	Northcoders Limited	07/02/2023	1,500,000	IT, Technology & Digital	Tech Returners, based in Manchester, is a training and recruitment firm. It specialises in providing training and placements for mid to senior-level professionals looking to re-enter the technology sector after a career break.
3	Tribepad Group Ltd	BGF Group PLC	31/01/2023	12,000,000	IT, Technology & Digital	Tribepad, based in Sheffield, is a recruitment technology firm. Founded in 2008, the platform delivers applicant tracking for high-profile brands including the BBC Tesco and KFC. The software is used to administrate tens of thousands of vacancies every month and is responsible for millions of active candidates.
4	Parity Professionals Ltd	Network Ventures Ltd	11/12/2023	3,000,000	IT, Technology & Digital	Provides data and technology-focused recruitment and professional services.
5	Regional Specialist Staffing and Healthcare Businesses of Impellam Group Plc	Private Group led by Twenty20 Capital	06/03/2023	85,000,000	Healthcare, Pharmaceutical & Social Care	Comprises Impellam’s Regional Specialist Staffing businesses in the UK (Tate, Blue Arrow Group, Chadwick Nott, Career Teachers) and its Healthcare Staffing business in the UK, Ireland and APAC (Medacs Global Group).

*of transactions for which price data was disclosed and publicly available.

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